The Economic Integration in East Asia and its Impacts on Industrial Restructuring

Young-Han Kim

Korean Economic Review, 2005, vol. 21, 237-254

Abstract: This paper examines the optimal strategy of regional economic integration considering the asymmetric technologies in the Asia Pacific Region. Based on the welfare analysis of three types of FTA regimes between technologically asymmetric countries, this paper demonstrates that the optimal path of regional integration for the country with an intermediate technology level would be to form multiple bilateral FTAs, i.e., Hub & Spoke type FTA between technically asymmetric countries from the very initial stage. The second best regime is the multilateral Asia-wide FTA. The worst case for a country with an intermediate technology would be to form a FTA with a country with advanced technologies, and extend the FTA with the less developed countries in the later stage. These results imply that the optimal strategy of regional integration for a country with an intermediate technology level, such as Korea, is to form a Hub & Spoke type FTA rather than a bilateral FTA with Japan followed by the participation of other Asian countries.

Keywords: regional economic integration; trade policy coordination (search for similar items in EconPapers)
JEL-codes: F12 F13 F15 (search for similar items in EconPapers)
Date: 2005
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